10 ms·

They make money by taking a cut of sales which the retailer is forced to discount, doubly cutting into his profits. Groupon is an obvious scam (at the expense o

They make money by taking a cut of sales which the retailer is forced to discount, doubly cutting into his profits. Groupon is an obvious scam (at the expense of merchants) and was started by a guy with a history of scams.

scrape_it 8y ago
So the retailer is forced to provide a deep discount, even if it forces them to sell at a loss? Who gets the final say here, might we assume Groupon? If so, why would retailers continue to utilize Groupon if it ends up being a net negative operation? Can you elaborate on why you think its a scam? What did the founders do previously which supports those allegations?
- scarface74 8y ago
  There are always customer acquisition costs. But you hope you get some combination of repeat customers and the customers who do come end up spending more. For instance one breakfast place we frequent is always running a $20 worth of food for $10. We always end up spending more. Besides soft drinks have ridiculous margins. Movie theaters make most of their money from concessions, food (movie and dinner type theaters) and the bar.
  - scrape_it 8y ago
    I see so the primarily utility of Groupon is that businesses can pay for a chance of repeat customers and/or extra spenders? I think the theater is a good example of the latter. Then the question arises, why can't businesses do this themeselves? Why can't the breakfast place you frequent just advertise $20 worth of food for $10? Why Groupon? Is it because Groupon can send foot traffic on demand for a cut of the sales?
    - mimixco 8y ago
      Yes, like Amazon, Groupon has its own traffic which would be hard for a small business to reach otherwise.
- mimixco 8y ago
  I'm sorry, it's been too long since I read about it. It was years ago. Maybe a Rolling Stone story? To your first question, yes, Gropon decides the price. There are many examples of comapnies who made an offer through Groupon which put them out of business.
WheelsAtLarge 8y ago
Scam? No! Companies can use it as marketing. If you plant it carefully you can get a few customers without having to fork a lot of cash for marketing by using Groupon. Also, if you need to get rid of inventory you can sell the items at cost rather than have to sell it to a discounter at a loss. Also, you decide whether to use them or not so you use them if it's an advantage to you. Groupon can definitely be a plus to a company.

scrape_it 8y ago

So the retailer is forced to provide a deep discount, even if it forces them to sell at a loss? Who gets the final say here, might we assume Groupon? If so, why would retailers continue to utilize Groupon if it ends up being a net negative operation? Can you elaborate on why you think its a scam? What did the founders do previously which supports those allegations?

scarface74 8y ago
There are always customer acquisition costs. But you hope you get some combination of repeat customers and the customers who do come end up spending more. For instance one breakfast place we frequent is always running a $20 worth of food for $10. We always end up spending more. Besides soft drinks have ridiculous margins. Movie theaters make most of their money from concessions, food (movie and dinner type theaters) and the bar.
- scrape_it 8y ago
  I see so the primarily utility of Groupon is that businesses can pay for a chance of repeat customers and/or extra spenders? I think the theater is a good example of the latter. Then the question arises, why can't businesses do this themeselves? Why can't the breakfast place you frequent just advertise $20 worth of food for $10? Why Groupon? Is it because Groupon can send foot traffic on demand for a cut of the sales?
  - mimixco 8y ago
    Yes, like Amazon, Groupon has its own traffic which would be hard for a small business to reach otherwise.
mimixco 8y ago
I'm sorry, it's been too long since I read about it. It was years ago. Maybe a Rolling Stone story? To your first question, yes, Gropon decides the price. There are many examples of comapnies who made an offer through Groupon which put them out of business.

WheelsAtLarge 8y ago

Scam? No! Companies can use it as marketing. If you plant it carefully you can get a few customers without having to fork a lot of cash for marketing by using Groupon. Also, if you need to get rid of inventory you can sell the items at cost rather than have to sell it to a discounter at a loss. Also, you decide whether to use them or not so you use them if it's an advantage to you. Groupon can definitely be a plus to a company.